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Share capital and variation of rightsII. 1. Subject to the provisions of the Act and these Articles, the shares in the capital ofthe company shall be under the control of the Directors who may issue, allot or otherwisedispose of the same or any of them to such persons, in such proportion and on such termsand conditions and either at a premium or at par and at such time as they may from time totime think fit.

2. (i) Every person whose name is entered as a member in the register of members shallbe entitled to receive within two months after incorporation, in case of subscribers to thememorandum or after allotment or within one month after the application for the registrationof transfer or transmission or within such other period as the conditions of issue shall beprovided,—(a) one certificate for all his shares without payment of any charges; or(b) several certificates, each for one or more of his shares, upon payment oftwenty rupees for each certificate after the first.(ii) Every certificate shall be under the seal and shall specify the shares to which itrelates and the amount paid-up thereon.(iii) In respect of any share or shares held jointly by several persons, the companyshall not be bound to issue more than one certificate, and delivery of a certificate for a shareto one of several joint holders shall be sufficient delivery to all such holders.3. (i) If any share certificate be worn out, defaced, mutilated or torn or if there be nofurther space on the back for endorsement of transfer, then upon production and surrenderthereof to the company, a new certificate may be issued in lieu thereof, and if any certificateis lost or destroyed then upon proof thereof to the satisfaction of the company and onexecution of such indemnity as the company deem adequate, a new certificate in lieu thereofshall be given. Every certificate under this Article shall be issued on payment oftwenty rupees for each certificate.(ii) The provisions of Articles (2) and (3) shall mutatis mutandis apply to debenturesof the company.4. Except as required by law, no person shall be recognised by the company as holdingany share upon any trust, and the company shall not be bound by, or be compelled in anyway to recognise (even when having notice thereof) any equitable, contingent, future orpartial interest in any share, or any interest in any fractional part of a share, or (except only asby these regulations or by law otherwise provided) any other rights in respect of any shareexcept an absolute right to the entirety thereof in the registered holder.5. (i) The company may exercise the powers of paying commissions conferred bysub-section (6) of section 40, provided that the rate per cent. or the amount of the commissionpaid or agreed to be paid shall be disclosed in the manner required by that section and rulesmade thereunder.

(ii) The rate or amount of the commission shall not exceed the rate or amount prescribedin rules made under sub-section (6) of section 40.(iii) The commission may be satisfied by the payment of cash or the allotment of fullyor partly paid shares or partly in the one way and partly in the other.6. (i) If at any time the share capital is divided into different classes of shares, the rightsattached to any class (unless otherwise provided by the terms of issue of the shares of thatclass) may, subject to the provisions of section 48, and whether or not the company is beingwound up, be varied with the consent in writing of the holders of three-fourths of the issuedshares of that class, or with the sanction of a special resolution passed at a separate meetingof the holders of the shares of that class.(ii) To every such separate meeting, the provisions of these regulations relating togeneral meetings shall mutatis mutandis apply, but so that the necessary quorum shall be atleast two persons holding at least one-third of the issued shares of the class in question.7. The rights conferred upon the holders of the shares of any class issued withpreferred or other rights shall not, unless otherwise expressly provided by the terms of issueof the shares of that class, be deemed to be varied by the creation or issue of further sharesranking pari passu therewith.

8. Subject to the provisions of section 55, any preference shares may, with the sanctionof an ordinary resolution, be issued on the terms that they are to be redeemed on such termsand in such manner as the company before the issue of the shares may, by special resolution,determine.Lien9. (i) The company shall have a first and paramount lien—(a) on every share (not being a fully paid share), for all monies (whether presentlypayable or not) called, or payable at a fixed time, in respect of that share; and(b) on all shares (not being fully paid shares) standing registered in the name ofa single person, for all monies presently payable by him or his estate to the company:Provided that the Board of directors may at any time declare any share to bewholly or in part exempt from the provisions of this clause.(ii) The company’s lien, if any, on a share shall extend to all dividends payable andbonuses declared from time to time in respect of such shares.10. The company may sell, in such manner as the Board thinks fit, any shares on whichthe company has a lien:Provided that no sale shall be made—(a) unless a sum in respect of which the lien exists is presently payable; or(b) until the expiration of fourteen days after a notice in writing stating anddemanding payment of such part of the amount in respect of which the lien exists as ispresently payable, has been given to the registered holder for the time being of theshare or the person entitled thereto by reason of his death or insolvency.

11. (i) To give effect to any such sale, the Board may authorise some person to transferthe shares sold to the purchaser thereof.(ii) The purchaser shall be registered as the holder of the shares comprised in any suchtransfer.(iii) The purchaser shall not be bound to see to the application of the purchase money,nor shall his title to the shares be affected by any irregularity or invalidity in the proceedingsin reference to the sale.12. (i) The proceeds of the sale shall be received by the company and applied inpayment of such part of the amount in respect of which the lien exists as is presently payable.(ii) The residue, if any, shall, subject to a like lien for sums not presently payable asexisted upon the shares before the sale, be paid to the person entitled to the shares at thedate of the sale.Calls on shares13. (i) The Board may, from time to time, make calls upon the members in respect of anymonies unpaid on their shares (whether on account of the nominal value of the shares or byway of premium) and not by the conditions of allotment thereof made payable at fixed times:Provided that no call shall exceed one-fourth of the nominal value of the share or bepayable at less than one month from the date fixed for the payment of the last preceding call.(ii) Each member shall, subject to receiving at least fourteen days’ notice specifyingthe time or times and place of payment, pay to the company, at the time or times and place sospecified, the amount called on his shares.

(iii) A call may be revoked or postponed at the discretion of the Board.

14. A call shall be deemed to have been made at the time when the resolution of theBoard authorising the call was passed and may be required to be paid by instalments.15. The joint holders of a share shall be jointly and severally liable to pay all calls inrespect thereof.16. (i) If a sum called in respect of a share is not paid before or on the day appointed forpayment thereof, the person from whom the sum is due shall pay interest thereon from theday appointed for payment thereof to the time of actual payment at ten per cent. per annumor at such lower rate, if any, as the Board may determine.(ii) The Board shall be at liberty to waive payment of any such interest wholly or inpart.17. (i) Any sum which by the terms of issue of a share becomes payable on allotmentor at any fixed date, whether on account of the nominal value of the share or by way ofpremium, shall, for the purposes of these regulations, be deemed to be a call duly made andpayable on the date on which by the terms of issue such sum becomes payable.(ii) In case of non-payment of such sum, all the relevant provisions of these regulationsas to payment of interest and expenses, forfeiture or otherwise shall apply as if such sum hadbecome payable by virtue of a call duly made and notified.18. The Board—(a) may, if it thinks fit, receive from any member willing to advance the same, allor any part of the monies uncalled and unpaid upon any shares held by him; and(b) upon all or any of the monies so advanced, may (until the same would, but forsuch advance, become presently payable) pay interest at such rate not exceeding,unless the company in general meeting shall otherwise direct, twelve per cent.per annum, as may be agreed upon between the Board and the member paying the sumin advance.

Transfer of shares19. (i) The instrument of transfer of any share in the company shall be executed by oron behalf of both the transferor and transferee.(ii) The transferor shall be deemed to remain a holder of the share until the name of thetransferee is entered in the register of members in respect thereof.20. The Board may, subject to the right of appeal conferred by section 58 decline toregister—(a) the transfer of a share, not being a fully paid share, to a person of whom theydo not approve; or(b) any transfer of shares on which the company has a lien.21. The Board may decline to recognise any instrument of transfer unless— (a) the instrument of transfer is in the form as prescribed in rules made undersub-section (1) of section 56; (b) the instrument of transfer is accompanied by the certificate of the shares towhich it relates, and such other evidence as the Board may reasonably require to showthe right of the transferor to make the transfer; and (c) the instrument of transfer is in respect of only one class of shares.22. On giving not less than seven days’ previous notice in accordance with section 91and rules made thereunder, the registration of transfers may be suspended at such times andfor such periods as the Board may from time to time determine:Provided that such registration shall not be suspended for more than thirty days atany one time or for more than forty-five days in the aggregate in any year.

Transmission of shares23. (i) On the death of a member, the survivor or survivors where the member was ajoint holder, and his nominee or nominees or legal representatives where he was a soleholder, shall be the only persons recognised by the company as having any title to hisinterest in the shares.(ii) Nothing in clause (i) shall release the estate of a deceased joint holder from anyliability in respect of any share which had been jointly held by him with other persons.24. (i) Any person becoming entitled to a share in consequence of the death orinsolvency of a member may, upon such evidence being produced as may from time to timeproperly be required by the Board and subject as hereinafter provided, elect, either—(a) to be registered himself as holder of the share; or(b) to make such transfer of the share as the deceased or insolvent member couldhave made.(ii) The Board shall, in either case, have the same right to decline or suspend registrationas it would have had, if the deceased or insolvent member had transferred the share beforehis death or insolvency.25. (i) If the person so becoming entitled shall elect to be registered as holder of theshare himself, he shall deliver or send to the company a notice in writing signed by himstating that he so elects.(ii) If the person aforesaid shall elect to transfer the share, he shall testify his electionby executing a transfer of the share.(iii) All the limitations, restrictions and provisions of these regulations relating to theright to transfer and the registration of transfers of shares shall be applicable to any suchnotice or transfer as aforesaid as if the death or insolvency of the member had not occurredand the notice or transfer were a transfer signed by that member.

26. A person becoming entitled to a share by reason of the death or insolvency of theholder shall be entitled to the same dividends and other advantages to which he would beentitled if he were the registered holder of the share, except that he shall not, before beingregistered as a member in respect of the share, be entitled in respect of it to exercise any rightconferred by membership in relation to meetings of the company:Provided that the Board may, at any time, give notice requiring any such person toelect either to be registered himself or to transfer the share, and if the notice is not compliedwith within ninety days, the Board may thereafter withhold payment of all dividends, bonusesor other monies payable in respect of the share, until the requirements of the notice havebeen complied with.27. In case of a One Person Company—(i) on the death of the sole member, the person nominated by such member shallbe the person recognised by the company as having title to all the shares of themember;(ii) the nominee on becoming entitled to such shares in case of the member’sdeath shall be informed of such event by the Board of the company;(iii) such nominee shall be entitled to the same dividends and other rights andliabilities to which such sole member of the company was entitled or liable;(iv) on becoming member, such nominee shall nominate any other person withthe prior written consent of such person who, shall in the event of the death of themember, become the member of the company.

Forfeiture of shares28. If a member fails to pay any call, or instalment of a call, on the day appointed forpayment thereof, the Board may, at any time thereafter during such time as any part of the callor instalment remains unpaid, serve a notice on him requiring payment of so much of the callor instalment as is unpaid, together with any interest which may have accrued.29. The notice aforesaid shall—(a) name a further day (not being earlier than the expiry of fourteen days fromthe date of service of the notice) on or before which the payment required by the noticeis to be made; and(b) state that, in the event of non-payment on or before the day so named, theshares in respect of which the call was made shall be liable to be forfeited.30. If the requirements of any such notice as aforesaid are not complied with, anyshare in respect of which the notice has been given may, at any time thereafter, before thepayment required by the notice has been made, be forfeited by a resolution of the Board tothat effect.31. (i) A forfeited share may be sold or otherwise disposed of on such terms and insuch manner as the Board thinks fit.(ii) At any time before a sale or disposal as aforesaid, the Board may cancel theforfeiture on such terms as it thinks fit.32. (i) A person whose shares have been forfeited shall cease to be a member inrespect of the forfeited shares, but shall, notwithstanding the forfeiture, remain liable to payto the company all monies which, at the date of forfeiture, were presently payable by him tothe company in respect of the shares.

(ii) The liability of such person shall cease if and when the company shall havereceived payment in full of all such monies in respect of the shares.33. (i) A duly verified declaration in writing that the declarant is a director, the manageror the secretary, of the company, and that a share in the company has been duly forfeited ona date stated in the declaration, shall be conclusive evidence of the facts therein stated asagainst all persons claiming to be entitled to the share.(ii) The company may receive the consideration, if any, given for the share on any saleor disposal thereof and may execute a transfer of the share in favour of the person to whomthe share is sold or disposed of.(iii) The transferee shall thereupon be registered as the holder of the share.(iv) The transferee shall not be bound to see to the application of the purchase money,if any, nor shall his title to the share be affected by any irregularity or invalidity in theproceedings in reference to the forfeiture, sale or disposal of the share.34. The provisions of these regulations as to forfeiture shall apply in the case of nonpayment of any sum which, by the terms of issue of a share, becomes payable at a fixed time,whether on account of the nominal value of the share or by way of premium, as if the samehad been payable by virtue of a call duly made and notified.Alteration of capital35. The company may, from time to time, by ordinary resolution increase the sharecapital by such sum, to be divided into shares of such amount, as may be specified in theresolution.36. Subject to the provisions of section 61, the company may, by ordinary resolution,—(a) consolidate and divide all or any of its share capital into shares of largeramount than its existing shares;

(b) convert all or any of its fully paid-up shares into stock, and reconvert thatstock into fully paid-up shares of any denomination;(c) sub-divide its existing shares or any of them into shares of smaller amountthan is fixed by the memorandum;(d) cancel any shares which, at the date of the passing of the resolution, havenot been taken or agreed to be taken by any person.37. Where shares are converted into stock,—(a) the holders of stock may transfer the same or any part thereof in the samemanner as, and subject to the same regulations under which, the shares from which thestock arose might before the conversion have been transferred, or as near thereto ascircumstances admit:Provided that the Board may, from time to time, fix the minimum amount of stocktransferable, so, however, that such minimum shall not exceed the nominal amount ofthe shares from which the stock arose.(b) the holders of stock shall, according to the amount of stock held by them,have the same rights, privileges and advantages as regards dividends, voting atmeetings of the company, and other matters, as if they held the shares from which thestock arose; but no such privilege or advantage (except participation in the dividendsand profits of the company and in the assets on winding up) shall be conferred by anamount of stock which would not, if existing in shares, have conferred that privilege oradvantage.(c) such of the regulations of the company as are applicable to paid-up sharesshall apply to stock and the words “share” and “shareholder” in those regulationsshall include “stock” and “stock-holder” respectively.

38. The company may, by special resolution, reduce in any manner and with, andsubject to, any incident authorised and consent required by law,—(a) its share capital;(b) any capital redemption reserve account; or(c) any share premium account.

Capitalisation of profits39. (i) The company in general meeting may, upon the recommendation of the Board,resolve—(a) that it is desirable to capitalise any part of the amount for the time beingstanding to the credit of any of the company’s reserve accounts, or to the credit of theprofit and loss account, or otherwise available for distribution; and(b) that such sum be accordingly set free for distribution in the manner specifiedin clause (ii) amongst the members who would have been entitled thereto, if distributedby way of dividend and in the same proportions.(ii) The sum aforesaid shall not be paid in cash but shall be applied, subject to theprovision contained in clause (iii), either in or towards—(A) paying up any amounts for the time being unpaid on any shares held by suchmembers respectively;(B) paying up in full, unissued shares of the company to be allotted anddistributed, credited as fully paid-up, to and amongst such members in the proportionsaforesaid;

(C) partly in the way specified in sub-clause (A) and partly in that specified insub-clause (B);(D) A securities premium account and a capital redemption reserve accountmay, for the purposes of this regulation, be applied in the paying up of unissuedshares to be issued to members of the company as fully paid bonus shares;(E) The Board shall give effect to the resolution passed by the company inpursuance of this regulation.40. (i) Whenever such a resolution as aforesaid shall have been passed, the Board shall—(a) make all appropriations and applications of the undivided profits resolved tobe capitalised thereby, and all allotments and issues of fully paid shares if any; and(b) generally do all acts and things required to give effect thereto.(ii) The Board shall have power—(a) to make such provisions, by the issue of fractional certificates or by paymentin cash or otherwise as it thinks fit, for the case of shares becoming distributable infractions; and(b) to authorise any person to enter, on behalf of all the members entitled thereto,into an agreement with the company providing for the allotment to them respectively,credited as fully paid-up, of any further shares to which they may be entitled uponsuch capitalisation, or as the case may require, for the payment by the company ontheir behalf, by the application thereto of their respective proportions of profits resolvedto be capitalised, of the amount or any part of the amounts remaining unpaid on theirexisting shares;(iii) Any agreement made under such authority shall be effective and binding on suchmembers.Buy-back of shares

41. Notwithstanding anything contained in these articles but subject to the provisionsof sections 68 to 70 and any other applicable provision of the Act or any other law for the timebeing in force, the company may purchase its own shares or other specified securities.General meetings

42. All general meetings other than annual general meeting shall be called extraordinary general meeting.

43. (i) The Board may, whenever it thinks fit, call an extraordinary general meeting.(ii) If at any time directors capable of acting who are sufficient in number to form aquorum are not within India, any director or any two members of the company may call anextraordinary general meeting in the same manner, as nearly as possible, as that in whichsuch a meeting may be called by the Board.

Proceedings at general meetings44. (i) No business shall be transacted at any general meeting unless a quorum ofmembers is present at the time when the meeting proceeds to business.(ii) Save as otherwise provided herein, the quorum for the general meetings shall be asprovided in section 103.45. The chairperson, if any, of the Board shall preside as Chairperson at every generalmeeting of the company.46. If there is no such Chairperson, or if he is not present within fifteen minutes afterthe time appointed for holding the meeting, or is unwilling to act as chairperson of themeeting, the directors present shall elect one of their members to be Chairperson of themeeting

47. If at any meeting no director is willing to act as Chairperson or if no director ispresent within fifteen minutes after the time appointed for holding the meeting, the memberspresent shall choose one of their members to be Chairperson of the meeting.

48. In case of a One Person Company—(i) the resolution required to be passed at the general meetings of the companyshall be deemed to have been passed if the resolution is agreed upon by the solemember and communicated to the company and entered in the minutes book maintainedunder section 118;(ii) such minutes book shall be signed and dated by the member;(iii)the resolution shall become effective from the date of signing such minutesby the sole member.Adjournment of meeting

49. (i) The Chairperson may, with the consent of any meeting at which a quorum ispresent, and shall, if so directed by the meeting, adjourn the meeting from time to time andfrom place to place.(ii) No business shall be transacted at any adjourned meeting other than the businessleft unfinished at the meeting from which the adjournment took place.(iii) When a meeting is adjourned for thirty days or more, notice of the adjournedmeeting shall be given as in the case of an original meeting.(iv) Save as aforesaid, and as provided in section 103 of the Act, it shall not benecessary to give any notice of an adjournment or of the business to be transacted at anadjourned meeting.

Voting rights

50. Subject to any rights or restrictions for the time being attached to any class orclasses of shares,—(a) on a show of hands, every member present in person shall have one vote;and(b) on a poll, the voting rights of members shall be in proportion to his share inthe paid-up equity share capital of the company.

51. A member may exercise his vote at a meeting by electronic means in accordancewith section 108 and shall vote only once.

52. (i) In the case of joint holders, the vote of the senior who tenders a vote, whether inperson or by proxy, shall be accepted to the exclusion of the votes of the other joint holders.(ii) For this purpose, seniority shall be determined by the order in which the namesstand in the register of members.53. A member of unsound mind, or in respect of whom an order has been made by anycourt having jurisdiction in lunacy, may vote, whether on a show of hands or on a poll, by hiscommittee or other legal guardian, and any such committee or guardian may, on a poll, voteby proxy.

54. Any business other than that upon which a poll has been demanded may beproceeded with, pending the taking of the poll.

55. No member shall be entitled to vote at any general meeting unless all calls or othersums presently payable by him in respect of shares in the company have been paid.

56. (i) No objection shall be raised to the qualification of any voter except at themeeting or adjourned meeting at which the vote objected to is given or tendered, and everyvote not disallowed at such meeting shall be valid for all purposes.

(ii) Any such objection made in due time shall be referred to the Chairperson of themeeting, whose decision shall be final and conclusive.

Proxy57. The instrument appointing a proxy and the power-of-attorney or other authority,if any, under which it is signed or a notarised copy of that power or authority, shall bedeposited at the registered office of the company not less than 48 hours before the time forholding the meeting or adjourned meeting at which the person named in the instrumentproposes to vote, or, in the case of a poll, not less than 24 hours before the time appointed forthe taking of the poll; and in default the instrument of proxy shall not be treated as valid.58. An instrument appointing a proxy shall be in the form as prescribed in the rulesmade under section 105.59. A vote given in accordance with the terms of an instrument of proxy shall be valid,notwithstanding the previous death or insanity of the principal or the revocation of theproxy or of the authority under which the proxy was executed, or the transfer of the shares inrespect of which the proxy is given:Provided that no intimation in writing of such death, insanity, revocation or transfershall have been received by the company at its office before the commencement of themeeting or adjourned meeting at which the proxy is used.Board of Directors60. The number of the directors and the names of the first directors shall be determinedin writing by the subscribers of the memorandum or a majority of them.61. (i) The remuneration of the directors shall, in so far as it consists of a monthlypayment, be deemed to accrue from day-to-day.(ii) In addition to the remuneration payable to them in pursuance of the Act, thedirectors may be paid all travelling, hotel and other expenses properly incurred by them—(a) in attending and returning from meetings of the Board of Directors or anycommittee thereof or general meetings of the company; or(b) in connection with the business of the company

62. The Board may pay all expenses incurred in getting up and registering the company.63. The company may exercise the powers conferred on it by section 88 with regard tothe keeping of a foreign register; and the Board may (subject to the provisions of thatsection) make and vary such regulations as it may thinks fit respecting the keeping of anysuch register.64. All cheques, promissory notes, drafts, hundis, bills of exchange and other negotiableinstruments, and all receipts for monies paid to the company, shall be signed, drawn, accepted,endorsed, or otherwise executed, as the case may be, by such person and in such manner asthe Board shall from time to time by resolution determine.65. Every director present at any meeting of the Board or of a committee thereof shallsign his name in a book to be kept for that purpose.66. (i) Subject to the provisions of section 149, the Board shall have power at any time,and from time to time, to appoint a person as an additional director, provided the number ofthe directors and additional directors together shall not at any time exceed the maximumstrength fixed for the Board by the articles.(ii) Such person shall hold office only up to the date of the next annual general meetingof the company but shall be eligible for appointment by the company as a director at thatmeeting subject to the provisions of the Act.

Proceedings of the Board

67. (i) The Board of Directors may meet for the conduct of business, adjourn andotherwise regulate its meetings, as it thinks fit.(ii) A director may, and the manager or secretary on the requisition of a director shall,at any time, summon a meeting of the Board.

68. (i) Save as otherwise expressly provided in the Act, questions arising at anymeeting of the Board shall be decided by a majority of votes.(ii) In case of an equality of votes, the Chairperson of the Board, if any, shall have asecond or casting vote.

69. The continuing directors may act notwithstanding any vacancy in the Board; but,if and so long as their number is reduced below the quorum fixed by the Act for a meeting ofthe Board, the continuing directors or director may act for the purpose of increasing thenumber of directors to that fixed for the quorum, or of summoning a general meeting of thecompany, but for no other purpose.

70. (i) The Board may elect a Chairperson of its meetings and determine the period forwhich he is to hold office.(ii) If no such Chairperson is elected, or if at any meeting the Chairperson is notpresent within five minutes after the time appointed for holding the meeting, the directorspresent may choose one of their number to be Chairperson of the meeting.

71. (i) The Board may, subject to the provisions of the Act, delegate any of its powersto committees consisting of such member or members of its body as it thinks fit.(ii) Any committee so formed shall, in the exercise of the powers so delegated, conformto any regulations that may be imposed on it by the Board.

72. (i) A committee may elect a Chairperson of its meetings.

73. (i) A committee may meet and adjourn as it thinks fit.(ii) Questions arising at any meeting of a committee shall be determined by a majorityof votes of the members present, and in case of an equality of votes, the Chairperson shallhave a second or casting vote.74. All acts done in any meeting of the Board or of a committee thereof or by anyperson acting as a director, shall, notwithstanding that it may be afterwards discovered thatthere was some defect in the appointment of any one or more of such directors or of anyperson acting as aforesaid, or that they or any of them were disqualified, be as valid as ifevery such director or such person had been duly appointed and was qualified to be adirector.75. Save as otherwise expressly provided in the Act, a resolution in writing, signed byall the members of the Board or of a committee thereof, for the time being entitled to receivenotice of a meeting of the Board or committee, shall be valid and effective as if it had beenpassed at a meeting of the Board or committee, duly convened and held.76. In case of a One Person Company—(i) where the company is having only one director, all the businesses to betransacted at the meeting of the Board shall be entered into minutes book maintainedunder section 118;

(ii) such minutes book shall be signed and dated by the director;(iii) the resolution shall become effective from the date of signing such minutesby the director.Chief Executive Officer, Manager, Company Secretary or Chief Financial Officer77. Subject to the provisions of the Act,—(i) A chief executive officer, manager, company secretary or chief financial officermay be appointed by the Board for such term, at such remuneration and upon suchconditions as it may thinks fit; and any chief executive officer, manager, companysecretary or chief financial officer so appointed may be removed by means of aresolution of the Board;(ii) A director may be appointed as chief executive officer, manager, companysecretary or chief financial officer.78. A provision of the Act or these regulations requiring or authorising a thing to bedone by or to a director and chief executive officer, manager, company secretary or chieffinancial officer shall not be satisfied by its being done by or to the same person acting bothas director and as, or in place of, chief executive officer, manager, company secretary or chieffinancial officer.

79. (i) The Board shall provide for the safe custody of the seal.(ii) The seal of the company shall not be affixed to any instrument except by theauthority of a resolution of the Board or of a committee of the Board authorised by it in thatbehalf, and except in the presence of at least two directors and of the secretary or such otherperson as the Board may appoint for the purpose; and those two directors and the secretaryor other person aforesaid shall sign every instrument to which the seal of the company is soaffixed in their presence.Dividends and Reserve80. The company in general meeting may declare dividends, but no dividend shallexceed the amount recommended by the Board.81. Subject to the provisions of section 123, the Board may from time to time pay to themembers such interim dividends as appear to it to be justified by the profits of the company.82. (i) The Board may, before recommending any dividend, set aside out of the profitsof the company such sums as it thinks fit as a reserve or reserves which shall, at thediscretion of the Board, be applicable for any purpose to which the profits of the companymay be properly applied, including provision for meeting contingencies or for equalisingdividends; and pending such application, may, at the like discretion, either be employed inthe business of the company or be invested in such investments (other than shares of thecompany) as the Board may, from time to time, thinks fit.(ii) The Board may also carry forward any profits which it may consider necessary notto divide, without setting them aside as a reserve.83. (i) Subject to the rights of persons, if any, entitled to shares with special rights asto dividends, all dividends shall be declared and paid according to the amounts paid orcredited as paid on the shares in respect whereof the dividend is paid, but if and so long asnothing is paid upon any of the shares in the company, dividends may be declared and paidaccording to the amounts of the shares.(ii) No amount paid or credited as paid on a share in advance of calls shall be treatedfor the purposes of this regulation as paid on the share.

(iii) All dividends shall be apportioned and paid proportionately to the amounts paidor credited as paid on the shares during any portion or portions of the period in respect ofwhich the dividend is paid; but if any share is issued on terms providing that it shall rank fordividend as from a particular date such share shall rank for dividend accordingly.84. The Board may deduct from any dividend payable to any member all sums ofmoney, if any, presently payable by him to the company on account of calls or otherwise inrelation to the shares of the company.85. (i) Any dividend, interest or other monies payable in cash in respect of shares maybe paid by cheque or warrant sent through the post directed to the registered address of theholder or, in the case of joint holders, to the registered address of that one of the joint holderswho is first named on the register of members, or to such person and to such address as theholder or joint holders may in writing direct.(ii) Every such cheque or warrant shall be made payable to the order of the person towhom it is sent.86. Any one of two or more joint holders of a share may give effective receipts for anydividends, bonuses or other monies payable in respect of such share.87. Notice of any dividend that may have been declared shall be given to the personsentitled to share therein in the manner mentioned in the Act.88. No dividend shall bear interest against the company.Accounts89. (i) The Board shall from time to time determine whether and to what extent and atwhat times and places and under what conditions or regulations, the accounts and books ofthe company, or any of them, shall be open to the inspection of members not being directors.(ii) No member (not being a director) shall have any right of inspecting any account orbook or document of the company except as conferred by law or authorised by the Board orby the company in general meeting

Winding up90. Subject to the provisions of Chapter XX of the Act and rules made thereunder—(i) If the company shall be wound up, the liquidator may, with the sanction of aspecial resolution of the company and any other sanction required by the Act, divideamongst the members, in specie or kind, the whole or any part of the assets of thecompany, whether they shall consist of property of the same kind or not.(ii) For the purpose aforesaid, the liquidator may set such value as he deems fairupon any property to be divided as aforesaid and may determine how such divisionshall be carried out as between the members or different classes of members.(iii) The liquidator may, with the like sanction, vest the whole or any part of suchassets in trustees upon such trusts for the benefit of the contributories if he considersnecessary, but so that no member shall be compelled to accept any shares or othersecurities whereon there is any liability.Indemnity

91. Every officer of the company shall be indemnified out of the assets of the companyagainst any liability incurred by him in defending any proceedings, whether civil or criminal,in which judgment is given in his favour or in which he is acquitted or in which relief isgranted to him by the court or the Tribunal.

]]>Thu, 29 Aug 2013 04:58:54 +0000http://www.legalserviceindia.com/issues/topic1390-articles-of-association-of-a-company-limited-by-shares-new-posts.htmlhttp://www.legalserviceindia.com/issues/topic1389-general-instructions-for-preparation-of-balance-sheet-new-posts.html
1. An asset shall be classified as current when it satisfies any of the following criteria:—(a) it is expected to be realised in, or is intended for sale or consumption in, thecompany’s normal operating cycle;(b) it is held primarily for the purpose of being traded;(c) it is expected to be realised within twelve months after the reporting date; or(d) it is cash or cash equivalent unless it is restricted from being exchanged orused to settle a liability for at least twelve months after the reporting date.All other assets shall be classified as non-current.

2. An operating cycle is the time between the acquisition of assets for processing andtheir realisation in cash or cash equivalents. Where the normal operating cycle cannot beidentified, it is assumed to have a duration of twelve months.

3. A liability shall be classified as current when it satisfies any of the following criteria:—

(a) it is expected to be settled in the company’s normal operating cycle;(b) it is held primarily for the purpose of being traded;(c) it is due to be settled within twelve months after the reporting date; or(d) the company does not have an unconditional right to defer settlement of theliability for at least twelve months after the reporting date. Terms of a liability thatcould, at the option of the counterparty, result in its settlement by the issue of equityinstruments do not affect its classification.All other liabilities shall be classified as non-current.

4. A receivable shall be classified as a “trade receivable” if it is in respect of the amountdue on account of goods sold or services rendered in the normal course of business.

5. A payable shall be classified as a “trade payable” if it is in respect of the amount dueon account of goods purchased or services received in the normal course of business.

6. A company shall disclose the following in the notes to accounts.

A. Share CapitalFor each class of share capital (different classes of preference shares to betreated separately):(a) the number and amount of shares authorised;(b) the number of shares issued, subscribed and fully paid, and subscribed but not fully paid;(c) par value per share;(d) a reconciliation of the number of shares outstanding at the beginning and at the end of the reporting period;(e) the rights, preferences and restrictions attaching to each class of shares including restrictions on the distribution of dividends and the repayment of capital;(f) shares in respect of each class in the company held by its holding company or its ultimate holding company including shares held by or by subsidiaries or associates of the holding company or the ultimate holding company in aggregate;(g) shares in the company held by each shareholder holding more than 5 per cent. shares specifying the number of shares held;(h) shares reserved for issue under options and contracts/commitments for the sale of shares/disinvestment, including the terms and amounts;(i) for the period of five years immediately preceding the date as at which the Balance Sheet is prepared:

(A) Aggregate number and class of shares allotted as fully paid-uppursuant to contract(s) without payment being received in cash.(B) Aggregate number and class of shares allotted as fully paid-upby way of bonus shares.(C) Aggregate number and class of shares bought back.(j) terms of any securities convertible into equity/preference shares issuedalong with the earliest date of conversion in descending order starting from thefarthest such date;(k) calls unpaid (showing aggregate value of calls unpaid by directors andofficers);(l) forfeited shares (amount originally paid-up).B. Reserves and Surplus(i) Reserves and Surplus shall be classified as:(a) Capital Reserves;(b) Capital Redemption Reserve;(c) Securities Premium Reserve;(d) Debenture Redemption Reserve;(e) Revaluation Reserve;(f) Share Options Outstanding Account;(g) Other Reserves–(specify the nature and purpose of each reserve andthe amount in respect thereof);

(h) Surplus i.e., balance in Statement of Profit and Loss disclosingallocations and appropriations such as dividend, bonus shares and transfer to/from reserves, etc.;(Additions and deductions since last balance sheet to be shown undereach of the specified heads);(ii) A reserve specifically represented by earmarked investments shall be termedas a “fund”.(iii) Debit balance of statement of profit and loss shall be shown as a negativefigure under the head “Surplus”. Similarly, the balance of “Reserves and Surplus”,after adjusting negative balance of surplus, if any, shall be shown under the head“Reserves and Surplus” even if the resulting figure is in the negative.

C. Long-Term Borrowings(i) Long-term borrowings shall be classified as:(a) Bonds/debentures;(b) Term loans:(A) from banks.(B) from other parties.(c) Deferred payment liabilities;(d) Deposits;(e) Loans and advances from related parties;(f) Long term maturities of finance lease obligations;(g) Other loans and advances (specify nature).(ii) Borrowings shall further be sub-classified as secured and unsecured. Natureof security shall be specified separately in each case.(iii) Where loans have been guaranteed by directors or others, the aggregateamount of such loans under each head shall be disclosed.(iv) Bonds/debentures (along with the rate of interest and particulars ofredemption or conversion, as the case may be) shall be stated in descending order ofmaturity or conversion, starting from farthest redemption or conversion date, as thecase may be. Where bonds/debentures are redeemable by instalments, the date ofmaturity for this purpose must be reckoned as the date on which the first instalmentbecomes due.(v) Particulars of any redeemed bonds/debentures which the company has powerto reissue shall be disclosed.(vi) Terms of repayment of term loans and other loans shall be stated.(vii) Period and amount of continuing default as on the balance sheet date inrepayment of loans and interest, shall be specified separately in each case.

F. Short-term borrowings(i) Short-term borrowings shall be classified as:(a) Loans repayable on demand;(A) from banks.(B) from other parties.(b) Loans and advances from related parties;(c) Deposits;(d) Other loans and advances (specify nature).(ii) Borrowings shall further be sub-classified as secured and unsecured. Natureof security shall be specified separately in each case.(iii) Where loans have been guaranteed by directors or others, the aggregateamount of such loans under each head shall be disclosed.(iv) Period and amount of default as on the balance sheet date in repayment ofloans and interest, shall be specified separately in each case.

G. Other current liabilitiesThe amounts shall be classified as:(a) Current maturities of long-term debt;(b) Current maturities of finance lease obligations;(c) Interest accrued but not due on borrowings;(d) Interest accrued and due on borrowings;(e) Income received in advance;(f) Unpaid dividends;(g) Application money received for allotment of securities and due forrefund and interest accrued thereon. Share application money includes advancestowards allotment of share capital. The terms and conditions including the numberof shares proposed to be issued, the amount of premium, if any, and the periodbefore which shares shall be allotted shall be disclosed. It shall also be disclosedwhether the company has sufficient authorised capital to cover the share capitalamount resulting from allotment of shares out of such share application money.Further, the period for which the share application money has been pendingbeyond the period for allotment as mentioned in the document inviting applicationfor shares along with the reason for such share application money being pendingshall be disclosed. Share application money not exceeding the issued capitaland to the extent not refundable shall be shown under the head Equity and shareapplication money to the extent refundable, i.e., the amount in excess ofsubscription or in case the requirements of minimum subscription are not met,shall be separately shown under “Óther current liabilities”;(h) Unpaid matured deposits and interest accrued thereon;(i) Unpaid matured debentures and interest accrued thereon;(j) Other payables (specify nature).

I. Tangible assets(i) Classification shall be given as:(a) Land;(b) Buildings;(c) Plant and Equipment;(d) Furniture and Fixtures;(e) Vehicles;(f) Office equipment;(g) Others (specify nature).(ii) Assets under lease shall be separately specified under each class of asset.(iii) A reconciliation of the gross and net carrying amounts of each class of assets at the beginning and end of the reporting period showing additions, disposals, acquisitions through business combinations and other adjustments and the related depreciation and impairment losses/reversals shall be disclosed separately.

(iv) Where sums have been written-off on a reduction of capital or revaluation of assets or where sums have been added on revaluation of assets, every balance sheet subsequent to date of such write-off, or addition shall show the reduced or increased figures as applicable and shall by way of a note also show the amount of the reduction or increase as applicable together with the date thereof for the first five years subsequent to the date of such reduction or increase.

(ii) A reconciliation of the gross and net carrying amounts of each class of assets at the beginning and end of the reporting period showing additions, disposals, acquisitions through business combinations and other adjustments and the related amortization and impairment losses/reversals shall be disclosed separately.

(iii) Where sums have been written-off on a reduction of capital or revaluation of assets or where sums have been added on revaluation of assets, every balance sheet subsequent to date of such write-off, or addition shall show the reduced or increased figures as applicable and shall by way of a note also show the amount of the reduction or increase as applicable together with the date thereof for the first five years subsequent to the date of such reduction or increase.

K. Non-current investments(i) Non-current investments shall be classified as trade investments and otherinvestments and further classified as:(a) Investment property;(b) Investments in Equity Instruments;(c) Investments in preference shares;(d) Investments in Government or trust securities;(e) Investments in debentures or bonds;(f) Investments in Mutual Funds;(g) Investments in partnership firms;(h) Other non-current investments (specify nature).Under each classification, details shall be given of names of the bodies corporateindicating separately whether such bodies are (i) subsidiaries, (ii) associates,(iii) joint ventures, or (iv) controlled special purpose entities in whom investmentshave been made and the nature and extent of the investment so made in each suchbody corporate (showing separately investments which are partly-paid). In regard toinvestments in the capital of partnership firms, the names of the firms (with the namesof all their partners, total capital and the shares of each partner) shall be given.(ii) Investments carried at other than at cost should be separately stated specifyingthe basis for valuation thereof;(iii) The following shall also be disclosed

L. Long-term loans and advances(i) Long-term loans and advances shall be classified as:(a) Capital Advances;(b) Security Deposits;(c) Loans and advances to related parties (giving details thereof);(d) Other loans and advances (specify nature).(ii) The above shall also be separately sub-classified as:(a) Secured, considered good;(b) Unsecured, considered good;(c) Doubtful.(iii) Allowance for bad and doubtful loans and advances shall be disclosedunder the relevant heads separately.(iv) Loans and advances due by directors or other officers of the company orany of them either severally or jointly with any other persons or amounts due by firmsor private companies respectively in which any director is a partner or a director or amember should be separately stated.

(ii) Others (specify nature);(iii) Long term Trade Receivables, shall be sub-classified as:(A) (a) Secured, considered good;(B) Unsecured, considered good;(C) Doubtful.(b) Allowance for bad and doubtful debts shall be disclosed underthe relevant heads separately.(c) Debts due by directors or other officers of the company or any ofthem either severally or jointly with any other person or debts due by firmsor private companies respectively in which any director is a partner or adirector or a member should be separately stated.N. Current Investments(i) Current investments shall be classified as:(a) Investments in Equity Instruments;(b) Investment in Preference Shares;(c) Investments in Government or trust securities;(d) Investments in debentures or bonds;(e) Investments in Mutual Funds;(f) Investments in partnership firms;(g) Other investments (specify nature).

Under each classification, details shall be given of names of the bodies corporate[indicating separately whether such bodies are: (i) subsidiaries, (ii) associates,(iii) joint ventures, or (iv) controlled special purpose entities] in whom investmentshave been made and the nature and extent of the investment so made in each suchbody corporate (showing separately investments which are partly paid). In regard toinvestments in the capital of partnership firms, the names of the firms (with the namesof all their partners, total capital and the shares of each partner) shall be given.(ii) The following shall also be disclosed:(a) The basis of valuation of individual investments;(b) Aggregate amount of quoted investments and market value thereof;(c) Aggregate amount of unquoted investments;(d) Aggregate provision made for diminution in value of investments.O. Inventories(i) Inventories shall be classified as:(a) Raw materials;(b) Work-in-progress;(c) Finished goods;(d) Stock-in-trade (in respect of goods acquired for trading);(e) Stores and spares;(f) Loose tools;

(g) Others (specify nature).(ii) Goods-in-transit shall be disclosed under the relevant sub-head of inventories.(iii) Mode of valuation shall be stated.P. Trade Receivables(i) Aggregate amount of Trade Receivables outstanding for a period exceedingsix months from the date they are due for payment should be separately stated.(ii) Trade receivables shall be sub-classified as:(a) Secured, considered good;(b) Unsecured, considered good;(c) Doubtful.(iii) Allowance for bad and doubtful debts shall be disclosed under the relevantheads separately.(iv) Debts due by directors or other officers of the company or any of themeither severally or jointly with any other person or debts due by firms or privatecompanies respectively in which any director is a partner or a director or a membershould be separately stated.

(iv) Loans and advances due by directors or other officers of the company orany of them either severally or jointly with any other person or amounts due by firmsor private companies respectively in which any director is a partner or a director or amember shall be separately stated.

S. Other current assets (specify nature)This is an all-inclusive heading, which incorporates current assets that do not fitinto any other asset categories.

T. Contingent liabilities and commitments (to the extent not provided for)(i) Contingent liabilities shall be classified as:(a) Claims against the company not acknowledged as debt;(b) Guarantees;(c) Other money for which the company is contingently liable.(ii) Commitments shall be classified as:(a) Estimated amount of contracts remaining to be executed on capitalaccount and not provided for;(b) Uncalled liability on shares and other investments partly paid;(c) Other commitments (specify nature).

U. The amount of dividends proposed to be distributed to equity and preferenceshareholders for the period and the related amount per share shall be disclosedseparately. Arrears of fixed cumulative dividends on preference shares shall also bedisclosed separately.

V. Where in respect of an issue of securities made for a specific purpose, thewhole or part of the amount has not been used for the specific purpose at the balancesheet date, there shall be indicated by way of note how such unutilised amounts havebeen used or invested.

W. If, in the opinion of the Board, any of the assets other than fixed assets andnon-current investments do not have a value on realisation in the ordinary course ofbusiness at least equal to the amount at which they are stated, the fact that the Boardis of that opinion, shall be stated.

]]>Thu, 29 Aug 2013 04:46:57 +0000http://www.legalserviceindia.com/issues/topic1389-general-instructions-for-preparation-of-balance-sheet-new-posts.htmlhttp://www.legalserviceindia.com/issues/topic1388-general-instructions-for-preparation-of-statement-of-profit-and-loss-new-posts.html
1. The provisions of this Part shall apply to the income and expenditure accountreferred to in sub-clause (ii) of clause (40) of section 2 in like manner as they apply to astatement of profit and loss.

2. (A) In respect of a company other than a finance company revenue from operationsshall disclose separately in the notes revenue from—(a) Sale of products;(b) Sale of services;(c) Other operating revenues;Less:(d) Excise duty.(B) In respect of a finance company, revenue from operations shall include revenuefrom—(a) Interest; and(b) Other financial services.Revenue under each of the above heads shall be disclosed separately by way of notesto accounts to the extent applicable.

4. Other incomeOther income shall be classified as:(a) Interest Income (in case of a company other than a finance company);(b) Dividend Income;(c) Net gain/loss on sale of investments;(d) Other non-operating income (net of expenses directly attributableto such income).

5. Additional InformationA Company shall disclose by way of notes additional information regarding aggregateexpenditure and income on the following items:—(i) (a) Employee Benefits Expense [showing separately (i) salaries and wages,(ii) contribution to provident and other funds, (iii) expense on Employee Stock OptionScheme (ESOP) and Employee Stock Purchase Plan (ESPP), (iv) staff welfare expenses].(b) Depreciation and amortisation expense;(c) Any item of income or expenditure which exceeds one per cent. of the revenuefrom operations or Rs.1,00,000, whichever is higher;(d) Interest Income;

(e) Interest expense;(f) Dividend income;(g) Net gain/loss on sale of investments;(h) Adjustments to the carrying amount of investments;(i) Net gain or loss on foreign currency transaction and translation (other thanconsidered as finance cost);(j) Payments to the auditor as (a) auditor; (b) for taxation matters; (c) for companylaw matters; (d) for management services; (e) for other services; and (f) for reimbursement of expenses;(k) In case of Companies covered under section 135, amount of expenditure incurred on corporate social responsibility activities;(l) Details of items of exceptional and extraordinary nature;(m) Prior period items;

(b) In the case of trading companies, purchases in respect of goods traded in bythe company under broad heads.(c) In the case of companies rendering or supplying services, gross incomederived from services rendered or supplied under broad heads.(d) In the case of a company, which falls under more than one of the categoriesmentioned in (a), (b) and (c) above, it shall be sufficient compliance with the requirementsherein if purchases, sales and consumption of raw material and the gross income fromservices rendered is shown under broad heads.(e) In the case of other companies, gross income derived under broad heads.(iii) In the case of all concerns having works in progress, works-in-progressunder broad heads.(iv) (a) The aggregate, if material, of any amounts set aside or proposed to be setaside, to reserve, but not including provisions made to meet any specific liability,contingency or commitment known to exist at the date as to which the balance sheet ismade up.(b) The aggregate, if material, of any amounts withdrawn from such reserves.(v) (a) The aggregate, if material, of the amounts set aside to provisions made formeeting specific liabilities, contingencies or commitments.(b) The aggregate, if material, of the amounts withdrawn from such provisions,as no longer required.(vi) Expenditure incurred on each of the following items, separately for eachitem:—(a) Consumption of stores and spare parts;(b) Power and fuel;(c) Rent;(d) Repairs to buildings;(e) Repairs to machinery;(f) Insurance;

(g) Rates and taxes, excluding, taxes on income;(h) Miscellaneous expenses,(vii) (a) Dividends from subsidiary companies. (b) Provisions for losses of subsidiary companies.(viii) The profit and loss account shall also contain by way of a note the followinginformation, namely:—(a) Value of imports calculated on C.I.F basis by the company during thefinancial year in respect of—

I. Raw materials;II. Components and spare parts;III. Capital goods;(b) Expenditure in foreign currency during the financial year on account ofroyalty, know-how, professional and consultation fees, interest, and other matters;(c) Total value if all imported raw materials, spare parts and componentsconsumed during the financial year and the total value of all indigenous rawmaterials, spare parts and components similarly consumed and the percentageof each to the total consumption;(d) The amount remitted during the year in foreign currencies on accountof dividends with a specific mention of the total number of non-residentshareholders, the total number of shares held by them on which the dividendswere due and the year to which the dividends related;(e) Earnings in foreign exchange classified under the following heads,namely:—I. Export of goods calculated on F.O.B. basis;II. Royalty, know-how, professional and consultation fees;III. Interest and dividend;IV. Other income, indicating the nature thereof.Note:— Broad heads shall be decided taking into account the concept of materiality andpresentation of true and fair view of financial statements.

The Code is a guide to professional conduct for independent directors. Adherence to these standards by independent directors and fulfilment of their responsibilities in a professional and faithful manner will promote confidence of the investment community, particularly minority shareholders, regulators and companies in the institution of independent directors.

(3) exercise his responsibilities in a bona fide manner in the interest of the company;

(4) devote sufficient time and attention to his professional obligations for informed and balanced decision making;

(5) not allow any extraneous considerations that will vitiate his exercise of objective independent judgment in the paramount interest of the company as a whole, while concurring in or dissenting from the collective judgment of the Board in its decision making;

(6) not abuse his position to the detriment of the company or its shareholders or for the purpose of gaining direct or indirect personal advantage or advantage for any associated person;

(7) refrain from any action that would lead to loss of his independence;

(8) where circumstances arise which make an independent director lose his independence, the independent director must immediately inform the Board accordingly;

(9) assist the company in implementing the best corporate governance practices.

II. Role and functions:The independent directors shall:(1) help in bringing an independent judgment to bear on the Board’s deliberations especially on issues of strategy, performance, risk management, resources, key appointments and standards of conduct;

(2) bring an objective view in the evaluation of the performance of board and management;

(3) scrutinise the performance of management in meeting agreed goals and objectivesand monitor the reporting of performance;

(4) satisfy themselves on the integrity of financial information and that financialcontrols and the systems of risk management are robust and defensible;

(5) safeguard the interests of all stakeholders, particularly the minority shareholders;

(6) balance the conflicting interest of the stakeholders;

(7) determine appropriate levels of remuneration of executive directors, key managerial personnel and senior management and have a prime role in appointing and where necessary recommend removal of executive directors, key managerial personnel and senior management;

(8) moderate and arbitrate in the interest of the company as a whole, in situations of conflict between management and shareholder’s interest.

III. Duties :The independent directors shall—

(1) undertake appropriate induction and regularly update and refresh their skills,knowledge and familiarity with the company;

(2) seek appropriate clarification or amplification of information and, where necessary,take and follow appropriate professional advice and opinion of outside expertsat the expense of the company;

(3) strive to attend all meetings of the Board of Directors and of the Board committeesof which he is a member;

(4) participate constructively and actively in the committees of the Board in whichthey are chairpersons or members;

(5) strive to attend the general meetings of the company;(6) where they have concerns about the running of the company or a proposedaction, ensure that these are addressed by the Board and, to the extent that theyare not resolved, insist that their concerns are recorded in the minutes of theBoard meeting;

(7) keep themselves well informed about the company and the external environmentin which it operates;

(8) not to unfairly obstruct the functioning of an otherwise proper Board or committee of the Board;

(9) pay sufficient attention and ensure that adequate deliberations are held before approving related party transactions and assure themselves that the same are in the interest of the company;

(10) ascertain and ensure that the company has an adequate and functional vigil mechanism and to ensure that the interests of a person who uses such mechanism are not prejudicially affected on account of such use;

(11) report concerns about unethical behaviour, actual or suspected fraud or violation of the company’s code of conduct or ethics policy;

(12) acting within his authority, assist in protecting the legitimate interests of the company, shareholders and its employees;

(1) Appointment process of independent dir ectors shall be independent of thecompany management; while selecting independent directors the Board shall ensurethat there is appropriate balance of skills, experience and knowledge in the Boardso as to enable the Board to discharge its functions and duties effectively.

(2) The appointment of independent director(s) of the company shall be approvedat the meeting of the shareholders.

(3) The explanatory statement attached to the notice of the meeting for approvingthe appointment of independent director shall include a statement that in theopinion of the Board, the independent director proposed to be appointed fulfilsthe conditions specified in the Act and the rules made thereunder and that theproposed director is independent of the management.

(4) The appointment of independent directors shall be formalised through a letter ofappointment, which shall set out :(a) the term of appointment;(b) the expectation of the Board from the appointed director; the Board-levelcommittee(s) in which the director is expected to serve and its tasks;(c) the fiduciary duties that come with such an appointment along withaccompanying liabilities;(d) provision for Directors and Officers (D and O) insurance, if any;(e) the Code of Business Ethics that the company expects its directors andemployees to follow;(f) the list of actions that a director should not do while functioning as such inthe company; and(g) the remuneration, mentioning periodic fees, reimbursement of expenses forparticipation in the Boards and other meetings and profit related commission,if any.

(5) The terms and conditions of appointment of independent directors shall beopen for inspection at the registered office of the company by any memberduring normal business hours.

(6) The terms and conditions of appointment of independent directors shall also beposted on the company’s website.

V. Re-appointment:The re-appointment of independent director shall be on the basis of report ofperformance evaluation.

VI. Resignation or removal:

(1) The resignation or removal of an independent director shall be in the samemanner as is provided in sections 168 and 169 of the Act.

(2) An independent director who resigns or is removed from the Board of thecompany shall be replaced by a new independent director within a period of notmore than one hundred and eighty days from the date of such resignation orremoval, as the case may be.

(3) Where the company fulfils the requirement of independent directors in its Boardeven without filling the vacancy created by such resignation or removal, as thecase may be, the requirement of replacement by a new independent director shallnot apply.

VII. Separate meetings:(1) The independent directors of the company shall hold at least one meeting in a year, without the attendance of non-independent directors and members of management;

(2) All the independent directors of the company shall strive to be present at such meeting;

(3) The meeting shall:(a) review the performance of non-independent directors and the Board as a whole;

(b) review the performance of the Chairperson of the company, taking into accountthe views of executive directors and non-executive directors;(c) assess the quality, quantity and timeliness of flow of information between thecompany management and the Board that is necessary for the Board toeffectively and reasonably perform their duties.

VIII. Evaluation mechanism:(1) The performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the director being evaluated.

(2) On the basis of the report of performance evaluation, it shall be determined whether to extend or continue the term of appointment of the independent director.